JCP J C Penney Company Inc

By Drew FitzGerald 

More small retailers will be open for business on Thanksgiving Day--and they m not have a choice in the matter.

While most department stores set their own hours, the small shops that line mall hallways tend to follow their landlords' lead, industry executives say. Mall owners in turn take their cues from "anchor" chains like J.C. Penney Co. and Macy's Inc., which have made it clear that opening Thursday evening is the new tradition. J.C. Penney plans to open most of its stores starting at 3 p.m. on Thursday, while Macy's will open at 6 p.m.

Mall owners consider it "imperative for retailers and restaurants to be open" on Thanksgiving, said Anjee Solanki, national director of retail services for Colliers International Group Inc., a real-estate-services firm. "This is when they can capture as much foot [traffic] as possible and drive future business with specials for the following month. Every tenant must adhere to the hours for uniformity."

Stores that break mall hours can be subject to steep fines and other consequences, retail and real-estate executives say.

"Merchants are required to open at 6:00 p.m. on Thursday, November 26th, (Thanksgiving Day) until closing at midnight," said one letter from the Sunvalley Shopping Center in Concord, Calif. "All merchants have the option of remaining open midnight through 5:00 a.m. if they choose."

A spokeswoman for mall landlord Taubman Centers Inc. said eight of its other properties will stay closed on Thanksgiving, but not Sunvalley.

"History has shown that Sunvalley shoppers come out on Thanksgiving so we continue to open on the holiday to please them," the spokeswoman, Maria Mainville, said. "We ask that all in-line stores open so our customers have a consistent shopping experience."

Store managers say mall owners often threaten fines for staying closed on Thanksgiving but rarely collect on them. "Most of the time, we can call up the mall and they'll waive it for the first offense," said one retail executive with stores in dozens of malls. "That's kind of what we're banking on this year."

About half of the major mall owners sent tenants letters this month warning them that Thanksgiving hours were mandatory, this executive said. "The request is universal," this executive said. "The enforcement seems to be random."

About 12% of U.S. consumers plan to visit a store on Thanksgiving Day, according to a survey of more than 1,000 people by the International Council of Shopping Centers. That works out to about 38 million shoppers.

The vast majority of indoor malls will have most or all of their stores open on Thursday to meet the demand, ICSC spokesman Jesse Tron said. Jones Lang LaSalle Inc., which manages malls and shopping centers on property owners' behalf, said 23 of the 30 malls it manages plan to open at some point on Thursday.

Greg Maloney, chief of Americas retail at JLL, said a subset of owners started testing Thursday hours last year and aren't likely to pull back in the coming years.

"Thanksgiving is going to become more of a shopping day rather than the day after," Mr. Maloney said, noting that the shift is driven by consumers' demand for early deals. "The object of all of us is keeping someone in the store as long as we can."

Some chains still buck the trend. Nordstrom Inc. and Barnes & Noble Inc. plan to stay closed on Thanksgiving. Videogame chain GameStop Inc. said it would keep all of its 4,000 U.S. stores closed on Thursday, even in malls that have ordered stores to open.

GameStop spokesman Joey Mooring said the company contacted mall owners like General Growth Properties Inc. and Simon Property Group Inc. around September and October to warn them of its decision.

"GameStop has not received any fines from our mall-owner partners," he said. "We work closely throughout the year to offset times like this. Meaning, throughout the year we receive requests from our mall-owners to either open our mall-based stores early or keep them open later due to special occasions."

Simon said it works with its malls' retailers to determine whether to open on Thanksgiving. "If the decision is made to open, retailer participation is totally voluntary and no one is fined if they choose not to open," said Simon spokesman Les Morris.

General Growth declined to comment.

Some stores are exempt thanks to specific carve-outs in their lease agreements. Fast-food chain Chick-fil-A said it hasn't faced any pushback from landlords because its contracts stipulate that restaurants will stay closed on Sunday and major holidays, including Thanksgiving, from the outset.

"It's a very important part of the bargain we strike every time," Chick-fil-A executive John Featherston said.

Other chains aren't so lucky. Most lease agreements require their tenants to be open during "mall hours," which the property manager can define during the course of the year. When tenants signed leases four or five years ago, some understood that to include Black Friday, not Thanksgiving.

Even if they get around the fines, small stores that don't have as much leverage in lease negotiations can suffer less favorable terms the next time their lease comes up for renewal, according to a former Simon executive who asked not to be named.

The push for early Thanksgiving hours is simple: A half-closed mall won't bring in as much foot traffic or business to the stores that remain open. "No one benefits by that, except for the employees," the former Simon executive said.

Write to Drew FitzGerald at andrew.fitzgerald@wsj.com

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(END) Dow Jones Newswires

November 24, 2015 20:36 ET (01:36 GMT)

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